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IDC analyst: VR is hot right now and AR has a bright future

An analyst from the American market research firm IDC spoke with AllChinaTech on Tuesday about the latest trends in virtual reality (VR) and augmented reality (AR) after the release of IDC’s forecast on global VR/AR shipments.

IDC’s report in late April suggests that worldwide shipments of virtual reality hardware will reach 9.6 million in 2016 and that VR/AR hardware markets combined will see shipments of 110 million in 2020.

IDC identifies VR products in three major categories: screenless viewers which need a specific smartphone screen for the VR experience; tethered head mounted displays (HMDs) that are connected to computer devices including PCs, game consoles and smartphones; standalone HMDs which have their own chip and display screen.

“We don’t define Google Cardboard-like products as VR devices. Screenless viewers must be customized for certain smartphones with electronic components inside, including Samsung Gear VR and Huawei VR,” said IDC Senior Market Analyst for VR/AR, Neo Zheng.

Nevertheless, the Cardboard-like products seem to be the favorite in the Chinese market, maybe because of their affordability. Zheng thinks screenless viewers will continue to be hot in the second half of 2016 because flagship smartphones from Samsung and Huawei will attract potential users by default. But he does not think the standalone HMD and tethered HMD market will grow fast due to their high prices and a lack of high-quality content.

“Standalone HMDs are rarely seen in the international market. Chinese VR players including DeePoon and Pico have made their own standalone HMDs, but the whole market is still to be tested.”

Content is a major factor restricting the development of both tethered and standalone HMDs. Games and videos are still the main VR content available now.

“Consumers would be reluctant to pay for big-budget VR games at this early stage of the market, because currently devices are not perfect for long-hour game playing,” Zheng said.

“We do not think user generated content (UGC) is attractive, but we are positive towards VR video content including animation and live broadcasting of sports and concerts provided by more mature studios.”

VR has been a hot topic since the beginning of 2016. The Chinese market has a number of local VR device makers including ANTVR, DeePoon VR and 3Glasses VR. Chinese smartphone manufacturers have also entered this field including Xiaomi, Huawei and Lenovo.

In comparison, international VR device makers including Oculus and Sony tend to be slow in launching their own products. They take more time to hone their technologies for a better VR experience.

“There is indeed a gap between domestic VR device makers and overseas ones in terms of VR experience. But that gap is narrowing down after a few upgrades,” said Zheng.

In comparison to the hot VR market, the AR market is getting less attention at the moment. AR devices have better application prospects in terms of people’s interaction with the environment, but they are more technically demanding. AR devices are rare. The USD 3,000 Microsoft HoloLens is an example.

According to an IDC forecast in April, the global AR hardware market will see only 400,000 shipments in 2016. By 2020, however, that number will be 45.6 million, not much less than the 64.8 million VR hardware shipments projected.

“The market performance of AR devices was dismal in 2015 and 2016. Short battery life and high costs are the major challenges. But in the long run, AR devices can be applied in many scenarios where there are interactions between people and the outside world,” Zheng said.

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